Thirty-five years ago there was little trade on Kan Kun island, in the remotest corner of Mexico's Yucatan peninsula. It was a series of pristine white sandbars in a calm blue sea. Only three fishermen lived there, and only for part of the year.

But in the early 1970s it was discovered by international bankers, who thought they had found financial paradise, and the world's first purpose-built giant holiday resort was built.The ancient Mayan name Kan Kun -which means "nest of vipers" - was softened to the more tourist-friendly Cancun.

Next week 10,000 trade ministers and other government delgates, up to 20,000 Mexican peasants, students and intellectuals, 5,000 activists from international pressure groups and 2,000 media personnel from 146 countries will gather there for the biennial global trade summit. They will find themselves in one of two worlds.

In the hotel zone 12 miles of sandbars have been replaced with the fantastical skyline of modern industrial tourism - 200 luxury hotels plus casinos, fast-food joints and tacky pleasure palaces. The lagoons, coral reefs and wetlands are now irrevocably destroyed. Last month a Cancun marine park imported 36 dolphins from the Solomon Islands. World Trade Organisation delegates will be invited to swim with them for $86 (£54) a time, or pet them for $45.

In the other world, nine miles away across a narrow spit of land, a sprawling city of about 300,000 people has grown in the past 30 years to serve the tourists. Environment and development groups say that up to 40% of them live without sewerage or piped water, lucky to earn $10 a day.

Yesterday the two Cancuns were preparing for next week's ritual showdown of competing world views. The federal police, working with the army, have thrown a two-mile exclusion zone around the hotel area and out to sea, and will heavily guard the two access points.

Seven checkpoints will separate the town and the convention centre where the delegates meet. The authorities are preparing for trouble . This week the cheif of police said he would "trade blow for blow" with protesters. He is reported top have reserved a bullring and a football stadium in which to detain people.

Build-up

The activists believe that a "criminalisation campaign" against them has already begun in the press. "There are daily articles about foreign instigators, over 200,000 people coming, about folks bringing explosives and so on," said Lisa, an activist with Rant in California.

Pablo, a Mexican student, said: "We've seen a militaristic build-up, spying on activists, and intimidation of people on the streets. There is the sense that the police are becoming more autonomous of the civil authorities and present a real danger of provoking violence."

Although there will be direct action protests, neither the police nor the protesters realistically expect anything like the 1999 WTO summit in Seattle, when a national emergency was called - if only because the two worlds will be mostly kept well apart. The real confrontation is expected to be between competing ideas about how to tackle world poverty.

In the convention centre the debate will be held mostly in "green rooms" to which the press has no access. There the agenda will be largely devoted to agricultural subsidies and drug patents, the developed countries pushing for the WTO to move into new areas of foreign investment.

To the Mexican government, and many of the ministers and delegates, Cancun is a model of globalisation, showing just what the international economy can do for an impoverished place.

The tourist zone brings in up to 30% of all Mexico's foreign earnings and employs more than 70,000 people. But in the town of Cancun hundreds of Latin American peasant, student, trade union and indigenous groups will be debating free-trade zones, privatisation, sustainable alternatives, fair trade, and what they call the theft of their genetic resources. Many grassroots groups report that resistance is growing to proposed new free-trade areas and World Bank/IMF structural adjustment programmes.

New colonialism

Many regard Cancun as the worst of all possible worlds - a new "colonialism" which sucks money out of Mexico and impoverishes lives. The stars of the fringe show are expected to be Mayan leaders and the publicity-shy Zapatistas from the nearby state of Chiapas, who took up arms a decade ago against the Mexican government, largely in protest against free-trade zones and globalisation.

Walden Bello, a leading Malaysian economist,delivered a message to the Mexican government on behalf of the protesters this week.

"You shouldn't worry about us, since we come [to Cancun] simply to defend our ideas and our rights," he said. "You should worry, instead, about defending Mexican sovereignty from the security forces of the US during the meeting."

Yesterday international pressure groups called for help for poor Mexicans to travel to Cancun. "People want to go to Cancun to be heard," said Peter Rossett, an American activist who has just returned from a tour of the desperately poor farming region beyond the tourist resort.

"People are really angry at how free trade has driven down crop prices. They just cannot afford the very expensive bus fares and cost of food for a week in Cancun and their organisations cannot afford to rent buses. In just one rural area, Felipe Carrillo Puerto, it would cost more than $70,000 to get everyone who wants to go to Cancun there."

Raul, a forestry worker from outside Mexico City working with Friends of the Earth-Mexico, said: "The people of Cancun are a bit frightened. They see convoys of army and police coming in and they don't know what will happen."